Legislative Update

Senate Unveils Budget Proposal

The Senate unveiled their budget proposal late Sunday evening. The plan calls for $20.58 billion in spending for the 2013-14 fiscal year, which is a 2.3 percent increase over the current year’s budget. The plan provides for a $217 million tax cut, assuming the passage of a tax reform bill.
Other details of the plan include: a $24.4 million increase in the J-DIG business recruiting incentives, bringing total funding for the program to $51.8 million; elimination of the N.C. Center for the Advancement of Teaching; eliminates a flexibility cut for public schools while altering funding adjustments based on changing student head counts; changes Medicaid reimbursement rates for hospitals by creating regionalized payments designed to curb disparities in hospital billing; creates a new Rural Economic Development Division with the Department of Commerce; and consolidates water-related grant programs into a new Division of Water Infrastructure. Highlights of budget impacts include:

Education K-12

• Cuts the Department of Public Instruction budget by 2.5%
• Provides no raises for teachers in 2013-14, but funds a $500 merit increase for some teachers in 2014-15.
• Provides nearly $19 million to carry out changes in Excellent Schools Act.
• Ends funding for N.C. Center for the Advancement of Teaching and the Teaching Fellows program.
• Increases funding for Teach for America, which recruits teachers for high-need school districts.

UNC System

• Cuts $48 million to campuses
• Adds no additional tuition increases beyond those already approved by the UNC Board of Governors.
• Phases out UNC tuition grant for students who graduate from the N.C. School of Science and Mathematics and attend a UNC campus (eliminated in 2014-15).

Community Colleges

• Changes enrollment funding model, reducing by $20 million.
• Increases tuition for degree-seeking students from $69 to $71.50 per credit hour for North Carolina residents, and from $261 to $263.50 for nonresidents.
• Restores $10 million in previous cuts to be used for performance funding for colleges that meet student success goals.

Department of Commerce

• $24.4 million increase in the J-DIG business recruiting incentives, bringing total funding for the program to $51.8 million
• Creation of new rural Economic Development Commission
• Johnson & Wales: No Appropriation
• Rural Center: Defunds
• Regional Economic Development Commissions: Repeal

Department of Natural and Environmental Resources

• Environmental Management Commission: Increases membership from 13 to 15, reappointments members based on new qualifications
• Clean Water Management Trust Fund: Transfer of authority to newly create water infrastructure division
• State Energy Office: Transfer from Department of Commerce to Department of Natural and Environmental Resources

Department of Health and Human Services

• Spends $434 million for continuation of the Medicaid program at its current level, accounting for changes in enrollment and health care services used.
• Transfers 2,500 slots in the first year and 5,000 slots in the second year from N.C. Pre-K the state's preschool for at-risk 4-year-olds, to child care subsidy.

Department of Justice/Public Safety

• Eliminates the 12 Superior Court judges not assigned to Business Court. The Senate had tried to eliminate these positions in a bill earlier this session.

Department of Transportation

• Implements Governor McCrory's proposed Strategic Mobility Formula to determine how most transportation funds are distributed across the state
• Cancels three toll projects: the Mid-Currituck Bridge, the Cape Fear Skyway and the Garden Parkway.
• Provides money for dredging shallow coastal channels, with $2.3 million from the gas tax and money from Wildlife Resources Commission fees, to maintain navigation channels in coastal waterways.
• Collects $1.5 million in new fees from electric and hybrid car owners: Electric car owners would pay a $100 annual fee. Owners of hybrid cars, who also pay tax on the gas and diesel fuel their cars and trucks consume, would pay a $50 fee.
• Increases Division of Motor Vehicles budget to upgrade technology and allow more offices to open their doors on Saturdays.
• Charges tolls on all seven ferry routes by Nov. 1, with rates high enough to generate $5 million to $10 million a year in revenues.

Click here to review the full Senate budget proposal

Crossover Deadline Passes

The crossover deadline passed after a week of intense debate. Crossover is a self-imposed deadline from lawmakers, requiring non-budget bills to clear either the House or the Senate. In order for a bill to continue to be eligible for consideration, it must have passed its originating chamber and have "crossed over" to the other chamber. The House and Senate acted on 259 bills last week. Bills that do not pass through one of the chambers by the deadline are effectively dead for the session, unless lawmakers use one of several tactics to circumvent the deadline. Although the deadline brings many bills to a stop, some of them get around the deadline through a number of methods, including gutting and amending another bill, adding it to another bill dealing with the same issue, inserting it into the budget as a special provision, or adding a fee. Constitutional amendments, redistricting bills, and adjournment resolutions are not subject to the crossover deadline.

Upcoming Committee Hearing on Tort Reform

The Senate is expected to hold a committee hearing on tort reform legislation, Senate Bill 648: NC Commerce Protection Act of 2013. The proposal addresses several civil liability issues, including:

• Prohibits Third-party Litigation Financing
• Employment Fraud Prevention
• Creates Transparency in Private Attorney Contracting by Attorney General

Click here for more information and to contact your legislators.

House Announces Tax Reform Plan

The House announced their version of tax reform and the legislation could be in committee next week. The plan, which has been called more modest than its Senate counterpart, would cut individual income taxes to 5.9 percent for all citizens, and lower the corporate income tax from 6.9 to 6.75 percent. Sales tax would also be expanded under the plan, covering services like auto repair, movie and entertainment tickets, and service contracts. The plan would result in a tax cut of $1.2 billion within five years. Review the full tax reform plan.

House Passes Toll Road Bill

The House passed a toll road bill that would prohibit the state from tolling existing interstate highways unless it maintains at least as many toll-free lanes as were in place prior to tolls being collected on the interstate. Currently, the law states that the NC Turnpike Authority can collect tolls on existing interstates with permission from the US Department of Transportation. Supporters of the bill claim that the bill would allow for new HOT lanes that could have higher speed limits than the other lanes, while still allowing people to use the roads at no charge.

Chamber’s 2013-2014 Legislative Agenda

The Charlotte Chamber adopted its 2013-2014 legislative agenda focused on job creation and advocating pro-business policies that deliver innovative programs and services. Below is the list of those bills the chamber is tracking in the General Assembly.

Bill Tracking

Take Action: Committee Hearing on Tort Reform Tomorrow

The Senate is expected to hold a committee hearing tomorrow, May 14, on tort reform legislation, Senate Bill 648: NC Commerce Protection Act of 2013. The proposal addresses several civil liability issues, including:

• Prohibits third-party litigation financing.
• Employment fraud prevention.
• Creates transparency in private attorney contracting by attorney general

Click here for more information and to contact your legislators.

Senate Unveils Tax Reform Blueprint

With growing discussions in Raleigh around the larger tax reform package, Sen. President Pro Tempore Phil Berger (R-Rockingham) held a press conference to preview the Senate’s legislation. The Tax Fairness Act would be gradually implemented beginning in 2014. The proposal would lower the personal income tax rate to 4.5 percent for most residents from the current high, marginal rate of 7.75 percent. The corporate tax rate would also fall from 6.9 percent to 6 percent, and the state franchise tax would drop marginally. The state and local sales tax would fall from 6.75 percent to 6.5 percent. In order to make up for the lost revenue, the sales tax would be expanded to cover a majority of services in the state. Business-to-business transportation would be exempt by allowing transportation involving payers of the franchise tax to be exempted.

Click here to review more information on the Tax Fairness Act.

Update: House Advances Governor’s Transportation Plan

The House has passed the proposal put forth by Gov. McCrory on a new transportation funding strategy. The bill, named the Strategic Mobility Formula, has been sent to the Senate for consideration. House Bill 817 proposes changes to prioritizing and paying for transportation projects and would select projects based on objective data and local input. Under the proposal, the Highway Trust Fund and federal aid funds would be subject to the new formula. Before passage, Rep. Tine (D-Dare) stripped the amendment that would have restored three toll projects into statute (Garden Parkway, Mid-Currituck Bridge and Cape Fear Skyway) and provided funding for the Garden Parkway and Mid-Currituck Bridge. In addition, an amendment was passed to address concerns about rural areas losing funding under the new funding strategy. Under the amendment, statewide projects would still receive 40 percent of the available funding for roads, while regional and local projects would each receive 30 percent. Before the change, 40 percent was allotted to seven regions and 20 percent was allotted to the existing 14 DOT divisions.

Click here for a summary of the “Strategic Mobility Formula.” HB817 now goes to the Senate for consideration.

Revival of Boards and Commissions Legislation

The House has passed a new bill that would overhaul the state’s boards and commissions.
House Bill 1011 features the majority of the proposals included in Senate Bill 10. Senate Bill 10 came out of conference committee and then fell apart after the House failed to pass the bill. Unlike the conference report from Senate Bill 10, the new bill does not include language to eliminate special appointed Superior Court judges or to clear out the Utilities Commission and the state Board of Elections. The bill also removes a clause that would have banned any state agency from using state funds or receipts for a statewide climate change action plan or adaptation strategy. The House passed the new proposal with a vote of 68-43, and it now goes to the Senate for consideration.

House Targets Rules & Regulations Review

The House Regulatory Reform Committee approved House Bill 74: Periodic Review & Expiration of Rules. The proposal would require state agencies to review regulations every 10 years by means of a process of revision or elimination. North Carolina currently has more than 25,000 regulations on the book, which regulate a wide array of policies for waste disposal, fishing, hunting, mining, nursing homes, environmental protection and others. HB76 would require a detailed review of some rules, including the ones that are necessary but remain controversial. Every 10 years, those rules would be researched, debated and negotiated. Rules that are deemed obsolete would be allowed to expire, and those deemed necessary but uncontroversial would remain intact. The bill is scheduled to be voted on by the full House on May 13 and, if passed, will move to the Senate for consideration.

Chamber’s 2013-2014 Legislative Agenda

The Charlotte Chamber adopted its 2013-2014 legislative agenda focused on job creation and advocating pro-business policies that deliver innovative programs and services. Below is the list of those bills the chamber is tracking in the General Assembly.

Bill Tracking

Update: House Advances Governor’s Transportation Plan

The House is advancing the proposal put forth by Gov. McCrory on a new transportation funding strategy. House Bill 817, named the “strategic mobility formula,” proposes changes to prioritizing and paying for transportation projects. The plan would select projects based on objective data and local input. Under the proposal, the Highway Trust Fund and federal aid funds would be subject to the new formula, which would distribute 40 percent of available dollars to large, statewide projects, 40 percent to projects in the seven regions and 20 percent to the current N.C. Department of Transportation divisions. The bill does not provide any new transportation revenue streams. In addition, the bill authorizes the state to enter into as many as three public-private partnerships for toll projects and allows the Turnpike Authority to designate high-occupancy tolls, or HOT lanes. Click here to review the summary of HB817. The bill has already passed the House Transportation and Finance committees and is scheduled for its final committee hearing in Appropriations on May 7.

TAKE ACTION: VOTE ON GARDEN PARKWAY FUNDING

Within the original version of House Bill 817, provisions were included to repeal gap funding for the Garden Parkway and Mid-Currituck Bridge. An amendment by Rep. Paul Tine (D-Dare) successfully passed the House Finance Committee to restore funding for both projects. The legislation now moves to the House Appropriations Committee, and we need your help contacting committee members to show support for the Garden Parkway. Click here to contact the House Appropriations Committee.

Senate Passes Comprehensive Regulatory Reform Package

The Senate passed its regulatory reform package, Senate Bill 612: Regulatory Reform Act of 2013. The proposal deals with a wide array of regulations, focusing primarily on environmental issues, including:

• City & County Ordinances: Preemption
• Groundwater Rules: Compliance boundaries
• Environmental Permits: Extending terms
• Riparian Buffer Rules: Exempting certain properties
• Rules Review Commission: Authority to review existing rules

The bill requires cities, counties and numerous state agencies to repeal or rewrite rules that go beyond federal law.  The bill’s sponsor, Sen. Andrew Brock (R-Davie) has stated that federal environmental laws already account for regional variations, and businesses find themselves forced to navigate a patchwork of laws that are constantly changing. SB612 now moves to the House for consideration.

Upcoming Committee Hearing on Tort Reform

The Senate is expected to hold a committee hearing this week on tort reform legislation, Senate Bill 648: NC Commerce Protection Act of 2013. The proposal addresses several civil liability issues, including:

• Prohibits Third-party Litigation Financing
• Employment Fraud Prevention
• Creates Transparency in Private Attorney Contracting by Attorney General

Click here for more information and to contact your legislators.

Senate Committee Passes Repeal of Renewable Energy Requirements

The Senate Finance Committee passed Senate Bill 365, The Affordable and Reliable Energy Act. The bill removes many of North Carolina’s renewable energy requirements. These requirements require utility companies to create a percentage of their power through renewable energy sources. Supporters of the renewable energy portfolio say that the renewable energy requirements have resulted in a large boost to the development of the alternative energy industry in North Carolina. Meanwhile, those in favor of the bill argue that the renewable energy requirements are an energy subsidy that results in higher energy rates for North Carolina taxpayers.

The bill now goes to the Senate Commerce Committee before a full Senate vote.

Chamber’s 2013-2014 Legislative Agenda

The Charlotte Chamber adopted its 2013-2014 legislative agenda focused on job creation and advocating pro-business policies that deliver innovative programs and services. Below is the list of those bills the chamber is tracking in the General Assembly.

Bill Tracking

House Committee Votes to Uphold Renewable Energy Requirements

The House Public Utilities and Energy Committee defeated House Bill 298 on Wednesday. The Affordable and Reliable Energy Act would have removed many of North Carolina’s renewable energy requirements. These requirements require utility companies to create a percentage of their power through renewable energy sources. Supporters of the renewable energy portfolio say that the renewable energy requirements have resulted in a large boost to the development of the alternative energy industry in North Carolina. Meanwhile, those in favor of the bill argued that the renewable energy requirements are an energy subsidy that results in higher energy rates for North Carolina taxpayers.

Senate Committee Votes to Rollback Environmental Regulations

The Senate Commerce Committee approved a bill that would rollback many regulations meant to protect the environment. Senate Bill 612 would require cities and counties to repeal any rules stricter than federal law. The bill would also require a list of environmental oversight boards and agencies to repeal or rewrite any state rule stricter than federal regulation on any given matter. This includes the Mining and Energy Commission, the Department of Environment and Natural Resources, the Environmental Management Commission, the Commission for Public Health, the Pesticide Board and the Coastal Resources, Marine Fisheries, Wildlife Resources and Sedimentation Control commissions. The legislation would also remove riparian buffers on private property throughout the Neuse and Tar-Pamlico river basins. Supporters of the legislation believe that it will help businesses throughout the state. Opponents of the bill argue that local governments should have more control over their environmental regulations, and that they should not be taken to a statewide level. SB 612 now heads to the full Senate for a floor vote.

House Defeats Compromise on Boards and Commissions Bill

Senate Bill 10 went to the floors of both chambers after a conference committee reported back to both. The Senate passed the bill only to see it voted down in the House about an hour later. Senate Bill 10 would remove and reorganize numerous state boards and commissions. Two of Gov. McCrory’s judicial appointees would have been removed had the legislation passed, which led to the differing votes in the two chambers. The Senate did not have issue with removing the two appointees, while the House found it reason to give a unanimous no vote. The two chambers previously disagreed on the bill, passing markedly different versions. In the original bill, the Senate proposed eliminating special judges. Meanwhile the House did not want to remove them, which led to the creation of the conference committee.

State’s Economic Outlook on Target

The General Assembly’s Fiscal Research Division updated the House and Senate Finance committees on the economy’s performance. Numbers have been trending in the right direction; through March, general fund revenue is $110 million higher than expected. Tax revenues are also $126 million above target. The division stated that North Carolina’s economy has stabilized and is on a steady growth track, but would not go as far as calling the economy “robust.” North Carolina’s economic growth is still behind the nation as a whole, but the division claimed that the state could surpass the nation by the summer of 2014. Officials noted the rebound of several important industries, such as construction, manufacturing, and the service sector.
The Fiscal Research Division’s Economic Outlook can be found here.

Gov. McCrory Announces IT Changes

Gov. Pat McCrory announced the creation of a new Innovation Center that will help the state government be more efficient in its information technology projects. The Innovation Center, to be located within the Department of Environment and Natural Resources, will be a gathering place for state agency chief information officers, public schools, universities and citizens to create and test new technology solutions. State Chief Information Officer Chris Estes claimed that the new center would connect people and help agencies deliver more projects on time and within budget. The Innovation Center announcement comes on the heels of a state audit that found IT projects, on average, were twice as expensive as originally thought and took 389 more days than expected to complete.

Voter Identification Bill Passes House

The House passed the Voter Identification Verification Act Wednesday on an 81-36 vote. House Bill 589 would require voters to present a government issued photo ID before filling out their ballots. Several amendments were discussed during the three hours of debate, but the majority of them failed. One successful amendment, brought forth by Democratic Rep. Charles Graham of Robeson County, added state tribal IDs to the accepted forms of identification listed in the bill. Those in favor of the legislation have argued that it would prevent voter fraud, while those against the bill claim that it would suppress voter turnout among social groups less likely to have ID.

Chamber’s 2013-2014 Legislative Agenda

The Charlotte Chamber adopted its 2013-2014 legislative agenda focused on job creation and advocating pro-business policies that deliver innovative programs and services. Below is the list of those bills the chamber is tracking in the General Assembly.

Bill Tracking

Governor McCrory Announces Transportation Plan

Gov. Pat McCrory announced a new plan for prioritizing and paying for transportation projects. The new plan, named the “strategic mobility formula,” would select projects based on objective data and local input. Under the proposal, all modes of transportation, including roads, trains, ports and airports, would compete for funding from the same pot. North Carolina Department of Transportation Secretary Tony Tata stated that the plan would spur economic growth and enhance the state’s economic ability to recover from the Great Recession. Under the current 10-year plan, there are 175 projects and 174,000 jobs while the new plan would fund 260 projects and create 240,000 jobs.  Highlights of the proposal include:

• $15 billion over 10 years – no new money
• Data-driven process
• New formula – 40/40/20 (statewide/regional/divisional)
• 40 percent statewide – for projects that are of statewide significance; will be determined by data-driven 'cost/benefit' analysis taking into account whether projects will reduce travel time and improve economic competitiveness of the state, safety and freight movement; all projects compete evenly.
• 40 percent regional – two NCDOT divisions will be grouped together for the "regional" analysis; 70 percent data driven and 30 percent local/regional rankings.
• 20 percent division – spread money evenly across all 14 NDOT divisions; projects within a division will be 50 percent data driven and 50 percent local rankings (MPOs/RPOs, etc.).

Read more about Gov. McCrory’s transportation plan. House Speaker Thom Tillis, R-Mecklenburg, and Senate Leader Phil Berger, R-Rockingham, have expressed support for the governor’s proposal. Rep. Bill Brawley, R-Mecklenburg and chairman of the House Transportation Committee, said the House is working on draft bill language that could be circulated early this week and heard in committee next week.

Update: Education Reform Proposals

The House approved House Bill 719, which reforms the teacher tenure system, giving administrators the ability to remove ineffective teachers. The new system removes tenure and gives teachers either a probationary or non-probationary status. Teachers would be placed on probationary status after receiving an unfavorable year-end review. If a teacher on probationary status received another unfavorable review, the instructor could be fired. Also included in the bill is a mandate for a study of how to reward good teachers with merit pay. Lawmakers also instructed the Department of Public Instruction to create a program allowing students to earn educational credit for experiences such as internships. The bill now moves to the Senate, where a rival education reform plan also passed. Like the House plan, Senate Bill 361 addresses education reform issues such as teacher tenure. The Senate plan would allow the top 25 percent of teachers to receive four-year contracts while the remainder of teachers would work on annual contracts without the ability to legally challenge their dismissal.

Competing Auto Insurance Reform Plans

Two bills reforming automobile insurance passed through the Senate. Senate Bill 180 allows insurance companies to offer optional program enhancements that are currently available in other states. Another bill, Senate Bill 181, keeps insurers from using years of driving experience as a factor for determining rates. This measure is meant to protect experienced drivers from outside the United States from having to pay the same rate as a driver with no driving experience. SB 181 would allow insurance companies to consider if a driver is younger than 19 years of age. Current law does not allow auto insurance companies to use age as a factor in determining rates.

A different auto insurance reform plan was voted down in the House Insurance Committee. House Bill 265 would have brought significantly more reform to the industry than the Senate counterparts. HB 265 allowed insurers to opt out of the N.C. Rate Bureau and set their own rates. The legislation also included a clause allowing optional program enhancements, similar to SB 180. Supporters of HB 265 claim that it would lower rates for up to 85 percent of drivers and allow full market competition for low rates. Opponents of the bill claimed that it would result in higher rates and more uninsured motorists. Insurance Commissioner Wayne Goodwin argued that the bill would strip him of his power to stop excessive rate increases proposed by insurers.

House Files Proposal to Halt Film Tax Credits

Under current law, film companies can claim a 25 percent tax credit, up to $20 million, on productions spending more than a quarter million dollars in the state. House Bill 994 would eliminate the tax credit and waive any tax liability the company accrues over the next five years up to an equivalent amount. Only companies based in North Carolina pay the taxes that could be waived, meaning that any companies from out of state would not receive any tax incentives. Opponents of the bill claim that it would slow the amount of films produced in the state. Supporters of the legislation claim that it would bring accountability to the state government.

Chamber’s 2013-2014 Legislative Agenda

The Charlotte Chamber adopted its 2013-2014 legislative agenda focused on job creation, advocating pro-business policies that deliver innovative programs and services. Below is the list of those bills the chamber is tracking in the General Assembly.

Bill Tracking